The state of Florida is one of the most tax-friendly states in the country, and along with the abundant sunshine and great weather it has to offer, the income tax schedule makes it doubly as attractive for businesses of all types. Not only are individuals not required to pay state income taxes, many businesses do not pay any income taxes as well. This means that how a business is legally structured can have a major impact on how profitable it can become. However, Florida is not a completely non-taxed business entity state.
Exempted taxation businesses
Florida is a great place to operate a personal business, as sole proprietorships are first on the list of those who do not pay state income taxes. Federal tax laws still apply for those who are self-employed, but the absence of a state tax means owners will have more operational cash at hand as well as help them meet their federal income tax obligations. Limited liability companies and “S” corporations are also tax-exempt. In any event, making sure your operation has the optimum structure typically requires assistance from a business law attorney who can provide advice as well ensure all legalities are met.
When tax obligations exist
Major corporations in Florida are still required to pay state income taxes. Even though small businesses structured as “S” corporations are still exempt, the standard “C” corporation pays at a 5.5% tax rate. Both corporation classifications enjoy some of the same corporate status benefits, but “C” corporations also have several other reporting requirements. It is essential that all corporate business law matters are understood by all business managers, and especially regarding major corporation tax obligations and potential tax avoidance policy that can be applied in daily operations.
Every new or growing business in Florida should consult with a business law attorney before taking any steps to change or establish its structure. This can be integral to the ongoing success or failure of the operation.